Link Real Estate Investment Trust (LINREI)

Link REIT’s current credit quality is high, and it remains a strong issuer in the A-rating range. Low net gearing, high occupancy, substantial interest coverage, available liquidity, A2/A/A ratings, and access to banks and the MTN market support short-term debt repayment capacity. The direction of credit quality is not one of abrupt deterioration, but after the FY2025/26 results it is neutral to slightly downward, with the pace of change likely to be gradual as headroom is reduced over several quarters to several years. The probability of a rapid change in the level or direction of credit quality is currently low, but would rise if a sharp valuation decline, weaker capital market access, prioritisation of unit buy-backs and a rating outlook change were to occur together.

The latest results answer the monitoring item from the previous report: confirmation of the full-year results. Revenue and net property income declined, DPU and the amount available for distribution fell, and NAV declined further. Hong Kong retail occupancy is high, but rental reversion is negative 8.2%, while mainland China retail is negative 14.3%. This indicates that Link REIT’s issue is not a sharp vacancy increase, but a reset in rent levels and asset valuations. Therefore, the credit view should be updated to: short-term liquidity is strong, but medium-term headroom depends on rents and valuations.

The REIT’s supports are clear. At end-March 2026, the net gearing ratio was 23.9% and the gross gearing ratio was 25.6%, well below the 50% REIT Code limit. EBITDA interest coverage was 5.1x, the average funding cost was 3.44%, average debt maturity was 3.5 years, and available liquidity was HK$12.2bn. The fact that the REIT arranged HK$25.3bn of funding in FY2025/26 also demonstrates capital market access. Viewed only through these figures, short-term default risk is low.